Exclusive: Q2 2015 US Retail Forex Profitability Report, Profits and Accounts Down

Being released today is the Finance Magnates' Q2 2015 US Retail Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term Profitability and Active Accounts report. During the quarter, average US customer profits declined on both a weighted and non-weighted calculation. On a weighted basis, 36.2% of US forex traders were profitable in Q2, compared to 36.4% in Q1. Similarly, non-weighted calculations showed profitability of customers at the average broker at 32.3%, which declined from 33.8% in Q1.

The non-weighted figure, which calculated broker averages equally and doesn’t take into account the number of their customers, was effected negatively by TraderStation. During the quarter, only 24.6% of TradeStation customers achieved profits in their accounts, compared to 32.5% in Q1. The decline was notable for the broker as their customers have typically reported profitability in the 32% to 38% range in previous reports.

Falling Account Figures

Dipping to a multi-year low, active account figures in the US dropped 4.0% from Q1 to 91,811. During the Q2 period, yet another Forex Broker Forex Broker In the forex space, a broker is any company that can provide traders with access to a platform that permits the buying and selling of multiple currencies.The retail forex industry has grown over the past two decades to include every major jurisdiction, which in turn has necessitated new regulatory oversight. Relative to the institutional sector, retail brokers are rather small portion of the greater forex market. However, traders can rely on brokers for leveraged trading in a 24-hour-a-day marke In the forex space, a broker is any company that can provide traders with access to a platform that permits the buying and selling of multiple currencies.The retail forex industry has grown over the past two decades to include every major jurisdiction, which in turn has necessitated new regulatory oversight. Relative to the institutional sector, retail brokers are rather small portion of the greater forex market. However, traders can rely on brokers for leveraged trading in a 24-hour-a-day marke Read this Term exited the US market. This time around it was giant Citigroup, which closed its entire CitiFX Pro retail forex unit, with US account holders being transferred to FXCM. The exit of Citigroup could be considered a symbol of the overall US industry, which continues to experience a multi-year trend of contraction of active traders in the country.

Among retail forex brokers remaining in the US, only InteractiveBrokers (IB) revealed an increase in accounts, growing active traders by 4.4% to 31,732. The top forex broker in the US for both active traders and profitability (46.5%), IB’s overall brokerage business has had a solid first half of 2015. Despite absorbing a greater than $100 million loss due to January’s Swiss franc move, the broker has reported strength in its forex, stock and futures trading business, with the firm’s stock price outperforming peers and hitting all-time highs.

In contrast to IB, both OANDA and FXCM reported a sharp decrease in active traders during Q2, with client numbers dropping over 9% at each broker. Asked about the decline, a representative at FXCM declined to provide an explanation to Finance Magnates about the active trader changes in their US business.

At OANDA, the broker attributed the decline in US active traders to the migration of non-US account holders to foreign entities. Answering to Finance Magnates, Drew Izzo, CMO at OANDA stated, “The reduction reported amongst our US client base is a reflection of a proper migration of foreign customers to their appropriate entities. Tracking customer moves to the appropriate domicile provides them access to the best possible product set based on the region they currently reside in, something we're committed to here at OANDA.” Izzo added that overall, OANDA’s global client figures are growing.

(Note: Figures for MB Trading are estimates)

Previous Reports: Q1, 2015, Q4 2014, Q3 2014, Q2 2014, Q1 2014, Q4 2013, Q3 2013, Q2 2013, Q1 2013, Q4 2012, Q3 2012, Q2 2012, Q1 2012